Should Couples Keep Their Money and Debts Separate?

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David at Money Under 30 is getting married. Congrats David! While preparing for their marriage, he and his fiancé wisely discussed their finances and chose to keep their spending accounts, emergency funds, and debt payments separate. While I can certainly understand the reasons behind wanting to keep pre-marriage debts and post-marriage finances separate, I don’t agree with it in practice.

Combining Finances Made It Easier to Agree on Goals

My husband and I both entered this marriage with debt. Some of it was credit cards from grad school, much of it was his student loans, and another portion was my student loans. He also had some medical loan debt from the period when he didn’t have insurance.

When we got married, we decided to merge everything, except student loan accounts which can’t, and shouldn’t, be consolidated together. Then we created a joint budget and set our financial goals together. We probably still would have set joint goals if we’d had separate accounts, but we would have to divide our paychecks into different accounts and debate about who would pay for what.

Working Down Debt Jointly Paid It Off Faster

I’ll be honest, we would not be living in our new house if we hadn’t agreed on a debt repayment plan and thrown ALL of our excess income at it. Rather than paying some of my money to one of my debts and a portion of his money to his debts, we put everything we could toward one debt and paid the minimum on the rest. By doing this, we made larger payments that reduced the principal faster, resulting in less interest accumulation and a faster pay-off. Then we moved on to the next debt. Each paid off debt snowballed into a larger amount for the next one.

I believe it would have taken us much longer to pay off any one debt if we hadn’t been working on it together.

We’re Better Aligned as a Couple

It helps that we’ve become more financially similar during our marriage, but I really do think that merging our finances completely helped us to align our financial goals and plans. If we were each managing money separately, we might not be working towards our goals as a team.

When We Invest, We’ll Be Better Diversified

Money Magazine frequently presents this problem in couples who have separate finances. They choose their investments separately, but often end up choosing similar mutual funds that leave them overinvested in one sector and underinvested in another. By investing jointly, you can make sure that you’re properly diversified.

Some studies show that couples who merge their finances have happier marriages, other studies show that couples with separate finances are happier. I don’t think there’s a right way or a wrong way. Both require good communication. Only you can decide what’s right for you and your spouse.

Where do you stand on the issue? Is your money merged or separate? If you want to merge them, see my complete list of everything you need to combine.

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